buyout Succession Planning

A leveraged buyout is a financial transaction in which a company is acquired primarily through the use of debt. In an LBO, the buyers use leverage to finance the acquisition by using the target company’s assets as collateral to secure a large loan. This allows the buyers to limit their initial out-of-pocket investment and leverage financial leverage to increase the potential return on their investment. LBO generally used to acquire profitable companies with a leading market position and strong growth prospects.